Overpayment Audits

Audits of a healthcare practice are typically initiated by private insurers or Medicare or Medicaid contractors. The aim of such an audit is to determine whether there has been overpayment for services provided. A healthcare provider may be selected for auditing based on certain red flags, or even randomly, as part of the increasing effort to cut down on healthcare spending. A determination that overpayment has occurred is not the same thing as being accused of fraud. The auditor does not need to determine that you engaged in dishonesty or even violated regulations in order to find that you were overpaid. Mistakes, clerical errors and even differences of opinion regarding the necessity of a given service can all lead an auditor to make a finding of overpayment and force the healthcare provider to repay the amount.

The first step of an overpayment audit will involve a review of the claims submitted by the provider, going back several years. This review is typically conducted without notice to the provider, so the first time you learn you are being audited may be when you receive a determination of overpayment, which will also state the reason for the determination and often request additional documentation and information. It is important to take action as soon as you receive this notice, since delaying may increase the amount you will be ultimately liable for and jeopardize your ability to present evidence. Do not respond before consulting an experienced healthcare attorney, since any communications will be considered evidence throughout the appeals process, as well as in any litigation that may ensue. Be aware that the ultimate goal of healthcare auditors is to recoup as high an amount as possible; thus, they will do their utmost to find mistakes on your part.

While some audits are truly random, most audits are triggered by one or more red flags that can come up in the insurer’s system. One of these red flags is a high service volume, which can cause the insurer to suspect that services are being over-utilized. Repeated use of the same CPT code for various patient encounters can also trigger scrutiny, since insurers assume that patient encounters will be of varying complexity and therefore codes will also vary. A high volume of code modifiers indicating that additional services were provided beyond the routine care indicated for the patient’s condition or procedure can also prompt an audit. In short, insurers have baseline assumptions about types of services and how often they are provided. Marked deviations from these assumptions, even if they occur as a result of a specific patient population or medical specialty, are likely to give rise to an audit.

Investigations

Unlike an audit, investigations are undertaken by federal and/or state law enforcement agencies, and are undertaken based on suspicions of illegal activities such as fraud. Investigations can be precipitated by a tip-off from a colleague, patient, or employee; by suspicious billing patterns; or by the results of an audit that reveals signs of fraud.

With today’s increasing vigilance in the Medicare and Medicaid fraud arena, federal and state agencies have sophisticated methods of detecting fraud, including systems that collect and analyze data from submitted claims to reveal patterns of fraudulent billing. As soon as you become aware that you are being investigated, the best course of action is to seek the advice of expert healthcare attorneys. It is best not to speak to anyone without your attorney, since any utterance, no matter how casually worded, can come back to haunt you when the authorities invariably interpret it in the worst possible light. Be sure to respond to requests for information or records in a timely manner, since delays can damage your case; however, always speak with your lawyer before submitting anything.

An investigation can have any number of outcomes, depending on the circumstances. In the best case scenario, the investigation will be concluded without any charges being filed and no further consequences. Other outcomes can include criminal prosecution, civil litigation, and professional sanctions.

To decrease the chances of being targeted for an audit or an investigation, providers should review their billing and coding practices to ensure that all claims are submitted accurately. Sometimes, the peculiarities of a specific practice will still result in a pattern deviation that can trigger suspicions. Providers who are aware that their practice may fall into this category should be particularly careful to document and substantiate the correctness of their claims submissions. All providers should keep full, accurate, and clear medical records that include documentation of the medical necessity for the services provided. Private insurers, as well as Medicaid and Medicare, have specific guidelines and instructions for establishing medical necessity and using codes. Strict adherence to these rules can be of great benefit if you find yourself facing allegations of overpayment. Many providers find it helpful to consult a healthcare law firm about the best way to set up an effective compliance program.

At Joseph Potashnik and Associates PC, we successfully represent healthcare providers in all matters involving Medicaid, Medicare, and private payor audits at all levels. Our office is located in New York City and we service healthcare providers in New York and nationwide. Contact us today to discuss your case.